Sen. Elizabeth Warren (D., Mass.) opted out of paying the voluntary higher tax rate in Massachusetts until 2017, saving her and her husband more than $50,000 over a decade.
Warren, who has formed a presidential exploratory committee, has proposed an "ultra-millionaire tax" that would place a flat 2-percent tax on individual fortunes of more than $50 million. It goes to 3 percent for those worth $1 billion. While her team says it would raise nearly $3 trillion over a decade, critics like the Washington Post say its implementation would be difficult and the potential impediments to the wealthy who renounce their citizenship reek of authoritarianism.
In their 2017 return filed last April, in an election year, Warren and husband Bruce Mann checked the box to pay the higher 5.85 percent income tax rate on their $956,634 of taxable income that year, rather than the state's 5.1 percent rate. It came out to $55,947. In the nine previous years—Warren posted 10 years of returns on her website last summer—they paid the standard tax rate each time. The optional higher tax rate has been offered in Massachusetts sine 2002.
Their decision to pay the lower rate saved them thousands each year. For instance, in 2008, she and Mann paid $43,419 of income taxes instead of $47,924 by not picking the 5.85 percent rate for their $819,221 in taxable income, saving them $4,505.
- (2009) Paid $51,345 instead of $56,673. Savings: $5,328.
- (2010) Paid $49,853 instead of $55,027. Savings: $5,174.
- (2011) Paid $31,845 instead of $35,149. Savings: $3,304.
- (2012) Paid $21,690 instead of $24,168. Savings: $2,478.
- (2013) Paid $55,381 instead of $61,710. Savings: $6,329.
- (2014) Paid $82,998 instead of $93,373. Savings: $10,375.
- (2015) Paid $59,875 instead of $68,013. Savings: $8,138.
- (2016) Paid $38,043 instead of $43,637. Savings: $5,594.
The savings came out to more than $51,000 over the past 10 years.
Warren's campaign did not respond to a request for comment on whether her newfound generosity was due to it being an election year or her future presidential hopes. Warren played coy throughout 2018 about running for president, claiming she would not do so, but she changed her tune shortly before Election Day, saying she would give it a look.
She was the first prominent Democrat to form an exploratory committee in December, and she is considered one of the top contenders in an increasingly crowded field. Her nascent campaign has focused on calling the system rigged against the middle class in favor of the wealthy, fueled by her anti-Wall Street reputation.
Warren and Mann's taxable income jumped from $413,936 in 2012, when she was running for the U.S. Senate for the first time, to $1,054,868 in 2013, her first year in office. In 2014, it leapt to $1,596,115 before falling to $1,162,616 in 2015 and $745,938 in 2016.
Boston Herald columnist Howie Carr noted Warren's decision to pay the higher tax last fall and reported that only 894 out of more than two million individual Massachusetts taxpayers chose the higher rate for fiscal year 2017. Only 1,200 Massachusetts residents on average since 2002 have opted to pay the higher rate, adding about $250,00 annually to the state's coffers, the state's Department of Revenue reported.
Massachusetts has a budget of about $40 billion, so the extra quarter-million comes to 0.000625 percent of the budget, New England Public Radio reported.